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IT dept to review new property deals

Saturday, April 23, 2011

Triggered by the Supreme Court to track down black money is the CBDT initiative to unearth unaccounted wealth generated through property deals, says Gajanan Khergamker

In an initiative taken by the Central Board of Direct Taxes (CBDT) to unearth black money in property deals which go largely undetected due to differences in market price and registry rates set by state government, the Income Tax department has decided to review all recent property deals to check for use of cash.

The department plans to start scrutiny from Delhi and the National Capital Region and subsequently turn it into an all-India exercise.  Incidentally, the use of cash in secondary market transactions is high and it has become commonplace for buyers to under-value the transaction to save on registration costs. It also turns into a capital tax burden for those who do not intend to use the money to buy new property.

Despite registrars across the country who are bound to report all real estate transactions of Rs 30 lakh or more, the instances of corruption continue to occur, unabatedly.

Now, the tax department will use the software available with it to match the data with the tax returns using the permanent account number (PAN) furnished by taxpayers while registering property. It isn’t clear if the department plans to match all returns filed by registrars with the PAN numbers available with it.
It isn’t a mean task for the department to review transactions of less than Rs 30 lakh. The government is likely to depend on developers to track these transactions.

With the Supreme Court breathing down heavily on the government for being unable to deal with blackmoney, especially wealth stashed away in tax havens, the government is keen to show that it is doing its bit to address the concerns.

At a recent press conference, CBDT chairman Sudhir Chandr also said the I-T department had cleared a record 85 lakh refunds in 2010-11 to make manpower available to crack down on tax evaders and money launderers.

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